The
shortcomings of traditional budget management, such as lack of adaptability,
time consuming and energy consuming, and conflicts among functions, are
increasingly prominent. According to professor zhan, traditional budgeting,
which evaluates and implements rewards and punishments on the basis of budget,
is actually "paying employees to lie", which will invalidate the
incentive effect of reward schemes. At the same time, many people believe that
performance evaluation based on fixed budget goals will bring many problems to
organizational behavior, which can be reflected in the following aspects:

Resulting
in wide budget margin, the budget coordination function was destroyed. Driven
by profit, managers always try to influence the budget to get a relaxed budget.
Budget slack is the adverse selection in budget management, although it
happened in the budget preparation process, but affect the execution of the
budget, the lower right to determine the budget in actual can reach the level
of the lower level, so as to make the subordinate cannot give full play to
their potential.

The
culture of corporate integrity was undermined by the manipulation of budget
enforcement. Another problem caused by rewarding and punishing people on the
basis of budget evaluation is to manipulate the budget implementation results
after the fact. In order to maximize their bonuses, managers often use earnings
manipulation to achieve their goals. If net income falls below the lower end of
the bonus scheme, managers will have an incentive to further reduce net income,
making them more likely to receive bonuses next year. Another way to manipulate
budget results is to falsify accounting information to achieve or exceed budget
goals.

Traditional
budgets focus on comprehensive budgets. Comprehensive budget is a huge system
project, involving business, capital, finance, information, human resources,
management and many other aspects. Budget work usually starts in the first four
months of each fiscal year, wasting a lot of time and human resources.

Hinder
the enterprise to improve continuously, increase the responsibility unit more
short-term behavior. The traditional budget control system constrains the
proper response and flexibility of enterprises to the environment and limits
the long-term development of enterprises. The traditional control system makes
people only focus on how to achieve the budget goals instead of how to maximize
the potential of enterprises or how to better adapt to the changing
environment.

In
view of the disadvantages of traditional budget, a new budget management model,
"exceeding budget", which ADAPTS to environmental change, emerged.
The so-called "exceeding budget" is to manage the performance of an
enterprise without budgeting, and decentralize the power of each
decision-making link in the form of authorization management. Some of the big
foreign companies have adopted the over-budget model and made great
achievements.

In
order to solve the disadvantages of traditional budget, new ways to seek
alternative to the traditional budget, BBRT for those who gave up the
traditional budget enterprise to carry on the investigation and study,
summarized a set of basic principles of "beyond budgeting" model: for
continuous improvement by setting ambitious goals, rather than a fixed annual
budget target. Not limited to annual planning, but for all segments of
sustainable development. On the compensation evaluation to the company's
performance or responsibility center to carry out rewards, rather than on the
basis of the budget to determine the numerical: not only consider the fixed
annual target completion, also for the common results provide incentives based
on the relative performance. It is necessary to take account of several key
performance indicators related to plan variance control. The allocation of
resources is not limited to annual budget, but also gives managers the power to
use resources independently if necessary. Not only according to the annual
planning cycle, but also timely through interaction throughout the company to
adjust. In corporate governance, management is required to have clear values
and noble thinking. Not only to achieve internal goals, but also to support the
activities of winning the market; There should be not only centralized
responsibility hierarchy but also network team organization responsible for
performance. Give the enterprise team enough freedom and power, no longer
simply require it to execute strictly as planned. Promote information sharing
on an open basis and coordinate inter-company transactions through process
design and rapid information feedback systems.

According
to the summary and development of BBRT members, it can be seen that the
"beyond budget" model has the following practices in organizational
design and performance management:

Front-line
managers are entrepreneurs, strategists and decision makers who are quick to
respond to new business opportunities. Middle managers are integrators of
various abilities within an organization. Senior managers are the creators of
the organization's internal frameworks and values, the leaders of innovation,
and challenging. Set up profit centers or investment centers with "certain
autonomy" as far as possible. Basic organization is the direct profit
center or investment to create value, between organizations is not only a
static flat structure, but also a kind of dynamic interaction, the link between
the government is to provide a powerful information network information flow,
the power of collaboration came from competitive forces in the "internal
market". Compared with traditional M organization, N organization is more
in line with the trend of The Times. This is because: in today's volatile
economic environment, enterprise's strategic goal is to create profits, is not
only reduce the cost, profit center and investment centre instead of cost
center for the grass-roots organization of the enterprise. The agency cost can
be reduced by simplifying the multi-layer agency relationship between the enterprise
as a whole and the grassroots organizations. In particular, transnational
enterprises, or enterprises are composed of multiple branches in different
industries, and multi-layer agents appear to be less economical and
inefficient. Use of market mechanism, the information flow is better than use
minority led by centralized control can have the effect of control and
incentive, it is of low cost, the second is to reduce "opposites"
between upper and lower management personnel.

About
performance management, "beyond budgeting" by creating "internal
market" model, the use of multi-level, can reflect the operating
performance of value indicators and evaluation system to integrate various
center subgoals, such as the balanced scorecard BSC or KPIS system, etc. Try to
give enterprising employees the opportunity to "manage their own
affairs". Motivate employees to actively create value; Emphasize the
market-driven nature of strategy formulation and the bottom-up nature of the
process.

Exceeding
the budget control model represents the development trend of enterprise
management control, which can bring more creativity and appreciation to the
enterprise. For now, however, not all businesses are suitable for application
of this model, the surmounting budget pattern means giving up the traditional
performance management framework, means that the effective integration of many
control methods. In this process, transformation and integration costs will
appear. Therefore, when deciding whether to apply this advanced management
control mode, two major influencing factors need to be considered:

The
most important factor is the current operation of the budget process.
Inefficient and time consuming budget generator is used beyond the budget of
the biggest obstacles, because the surmounting budget pattern is the core part
of the frequent rolling forecasts, usually by the budget planning process is
implemented in the past, as a result, the budgeting process inefficient cannot
provide a good foundation for beyond the budget.

Generally
speaking, the over-budget model is suitable for enterprises with fast change of
operating environment, wide product scope or rapid growth, and meanwhile,
intangible assets are very important for operation. For example, a large
cross-industry and cross-regional enterprise group; Networked business
organizations; Commercial banking, insurance, news media, advertising,
transportation, etc. Multistep or assembly production, reliance on scientific
and technological innovation, manufacture of finished products, such as
automobiles, petrochemicals, etc. These enterprises are characterized by the
characteristics of a market or industry strong permeability, change of the
market, and enterprises to respond to market sensitive, especially rely on
technological innovation, information products, provide services or material
product technology content high, enterprise internal between various center
technology dependence is not strong, or dependence is very strong, but must
cooperate, coexist in cooperation advantage. These enterprises or various
branches of the industry are mainly in line with the direct creation of value
in the market and have great uncertainty, so the implementation of the
traditional budget management system cannot meet the needs of enterprise development.
Only exceeding the budget is their best option. Some of these businesses or
industries are playing an increasingly important role in the economic
environment we face today.

Exceeding
the budget management model is of great importance to the theoretical research
and practical application of budget management in China. Due to the complexity
of China's economic environment and the inconsistency of the pace of enterprise
development, it is not possible to generalize enterprises to choose the
appropriate budget management model according to their own characteristics. The
operating environment changes rapidly, the product business scope is extensive
or the growth is rapid, simultaneously the intangible assets to the management
extremely important enterprise may adopt the exceeding budget management model;
Enterprises with strong predictability and stable product range have better
budget control model after improvement. The most important thing is to stick to
the traditional budget control model.